Mortgage broker Brett Sutton from Two Red Shoes said sentiment has shifted over the last four years when fixed interest rates were incredibly popular – providing borrowers with “certainty during a period of historically low rates”.
He told Yahoo Finance that now the dynamic has shifted.
“Now, the opposite is true. Fixed rates are no longer a “no-brainer” for most borrowers,” Sutton said.
“In recent times, fixed rates were much higher than variable rates, making them unattractive for homeowners.
“Today, while fixed rates have come down and are now much closer to variable rates, they’re still not appealing enough to drive a new wave of borrowers to fix.”
The Sydney broker said more borrowers were staying on variable rates as they, like the big banks, think the RBA will continue its rate cutting cycle.
“They don’t see the value in locking in a rate that’s only slightly lower than their current one, when they could potentially benefit from even bigger drops in the future,” he said.
So off the back of a surprise hold, and the potential for another in September, is this a good time to fix?
That all comes down to your personal circumstances.
“The gap between the best fixed and variable rates is often small, making the decision less about a significant saving and more about peace of mind. For those who value budgeting certainty above all else, a fixed rate might still make sense but for the majority, the bet is on the RBA continuing to ease monetary policy,” Sutton said.